Joomla creates the pages of your website dynamically when they are needed. So rather than having lots of complete pages stored on the webserver, Joomla instead creates each page on the fly when needed, by accessing all the content you have stored in your joomla database.
This process of building each page of the website dynamically can be sped up quite considerably using the Cache.
Without the cache turned on every time someone visits your page, all the computations that it took to build the page are done over and over again even if there is actually no change in what the visitor sees.
With the cache turned on, Joomla takes a "snap shot" of the whole page when it is first displayed. When that page is then visited again at a later stage Joomla displays the stored "snap shot" rather than repeating all the resource exhausting computations required to build the page the first time it was viewed.
However, there may be times you need to "clear" the cache, and purge it of all the "snap shots" it has stored. Perhaps you have updated a page or article on your website and noticed that when you try to view your changes the old un-modified version of that page is still displaying. Clearing the cache will solve this problem, and force a new "snap-shot" of the page in question.
To clear the cache of its stored content, click on Site from the top menu, and select Site Maintenance, and then Clear Cache from the drop down menu.